The rush of investment and the bullish nature of banking attitudes are mostly due to government policies as of late. “The recent selloff may hinder the pace of financial market reform but other structural reforms are still progressing,” Goldman said. “The implementation of state-owned enterprise (SOE) and fiscal reforms, and the upcoming 13th Five Year Plan, the first by the current administration, are key issues to watch.” Goldman sees SOE reforms as particularly important to China’s market outlook as these companies contributed approximately 40% to gross domestic product growth last year.
Investment bank, Deutsche Bank, also reaffirmed its positive forecast on China, saying “We continue to see sizable upside [in Chinese stocks].” Deutsche Bank has an end-of-year price target of 13,000 for the Hang Seng China Enterprises Index, which hit an intraday high of 10,591 this morning.
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